If you're trying to pay down some debt, you might be wondering what the impact would be if you simply increased your monthly payment each month by just a little, or even a lot. When you increase your monthly payment, you should specify that you want the payment applied to the principal amount. Reducing the amount of money you owe will reduce your interest charges each month, as the interest rate will be applied only to the outstanding loan balance. An increase in your monthly payment will lessen the amount of interest charges you will pay over the repayment period and shorten the number of months it will take to pay off the loan.